What would it take to make CISA a CSA?

As it stands, reported out of the Senate Envronmental and Public Works (EPW) Committee, the Lieberman-Warner bill represents a Climate InSecurity Act or CISA. Now, a core question:

What would it take to move it from CISA to a true CSA (Climate Security Act)?

For me, a key question is what would cause severe problems in the coming years for a strengthening of action if (actually when) it is required. If the measure puts a serious roadblock to a stronger bill, to Presidential, or even private action in the future (near or long term), then that is a serious problem.

Thus, the question, does Lieberman-Warner have such problems? And, sadly, the answer remains yes.

First off, Lieberman-Warner has pollution permit giveaways that are valued in the $100s of billions (with some estimates taking this giveaway of some 40% of pollution permits over the next 25 years in the $trillions). The permit giveaways are, well, a very serious issue, they create that sort of roadblock for future action as there is very little chance that a future Congress would be able (willing) to back away or modify this in the coming decade. On principle, there should be zero permit giveaways. They simply result in windfall profits to existing serial polluters. Even with this base principle, in a strong package, a ‘minimal’ amount of permit giveaways would not break this stubborn camel’s back. $100s of billions, however, is not minimal.

Secondly, efforts to introduce a stronger science led basis for the carbon board and controlling the system are quite problemmatic. This might be adaptable in the future, but a much stronger scientific underpinning for the Carbon Board — including the power to strengthen (and not just weaken) the carbon cap — is necessary. And, to not have a lookback provision for keeping warming below a target level (2 degrees) is a critical problem.

Third, well, perhaps this can be modified into the future, but the bill has a huge amount of resources (about $3=-400 billion) dedicated at the outset to a technology that is just slightly more than powerpoint thick: carbon capture and sequestration. One might ask whether those $100s of billions are well designated when there have been plans laid out for CCS test programs that range in estimated cost from $8 to 30 billion (from 10 to 30 test facilities). Does the other 90% of the designated resources need to be set aside for CCS before we even know whether it works? A huge amount of resources toward the uncertain payoff of CCS is therefore highly questionable, although that technical/technology bet almost could be readdressed if the tests aren’t panning out. The challenge is, however, that the bill would allow “CCS-ready” plants to go forward well before there is any degree of certainty that CCS is a reasonable option to be pursuing. This could lock in new CO2 spewing Less Dirty Coal plants with then, a decade from now, needing to face a painful choice as to whether to continue to allow them to pollute or to shut them down. Could the $billions (10s, 100s) of capital be better spent on more climate-friendly investments?

The failure of the bill to meet the 80% C02 reduction by 2050 is, somewhat surprisingly to me, relatively low on my priority list for change as long as there is a reasonable set of targets in the coming 15 years. (After all, who other than Rangel is highly likely to still be making legislative decisions 30 years from now?) In other words, getting the ball rolling in the right direction. The science might (I doubt it) show that the 80% was never required or, well, that 80% doesn’t do nearly enough (what I am afraid of). Changing a 42 years from now target … that is a relatively straightforward/easy change. And, the Lieberman-Warner bill has reasonable near term (2020) targets that should be applauded.

But, in the end, the giveaways of so many pollution permits are a reason for very serious concern. Past experience of “giveaways” of public goods under cap and trade (such as the Clean Air Act and the European Cap and Trade) have shown that the giveaways lead to windfall profits and raise the total cost of achieving the objective. We’ve seen similar results with other arenas, like giveaways of public spectrum to broadcasters. The society is better served via a Cap-Auction-Trade, securing some portion of the revenues for addressing the common good.

A market-based climate policy should follow the Energy Three Rs. It should help make using less energy cheaper than using more (reduce). It should make cleaner energy cheaper than dirty energy (renewables). And, it should provide a path for transferring clean up to the most cost effective path (remediate for fossil fuel use).

If the “CAP” gives away a huge part of the revenue stream, it will undercut our society’s ability to ‘reduce’, undercut the ability to move to renewables, and undercut our ability to remediate cost effectively. And, the giveaways undercut the ability to foster a fair and just system to deal with Global Warming and energy challenges.

And, well, going back to the original question, what would it take to make the CISA an acceptable (even if flawed) CSA? That it not incorporate provisions that undercut our future ability to adapt policies to better address energy and global warming challenges. Giving away these tremendous resources, a handout of resources that will not be recovered, is such a provision. And, as long as so many pollution permits are being handed out for free, this remains a Climate InSecurity Act.

9 responses to “What would it take to make CISA a CSA?”

Other issues:
* windfall profits unaddressed
* the combination of auction-revenue and allowance distribution is a mess (should non-covered entities like states, etc. be given allowances? Why shouldn’t they just get auction revenues??)
* decoupling incentives without mandatory switch to smart grid — decoupling is another word for guaranteed energy producer subsidies; that’s not a long term progressive thing unless the energy producers are forced to open up their grid to competition/open use through smart grid-type changes
* the creation of the non-governmental corporation to distribute auction revenues, sketchy
* compare against Gore proposal to see other gaps
* forestry provisions added in markup may be uncomfortably similar to “Healthy Forests” language
* starting to get laden with pet-project type provisions
* the Carbon Market Board can loosen restrictions but cannot tighten them